The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

This sentiment was evident when over 300 senior professionals offered their valued perspectives in responding to Johnston Carmichael’s annual Financial Services Sector Report.  Whilst the survey covered specific sub-sectors – retail banking, insurance, wealth & asset management, and private funds – the key themes are universal.

• Overall, the sector is in good health and looking to the future with confidence. Buoyed by more favourable economic indicators, executives are increasingly focusing their organisation’s strategies on investing for growth, rather than reducing cost.
• Enhancing customer experience is the top strategic focus for 57 per cent of firms, with technology playing a key role as their preferred solution.  The scale of investment is evident as 53 per cent of firms are planning significant investments over the next two years in process automation, AI, and machine learning. Half of respondents also want to further improve their digital services.
• How these digital capabilities are deployed with existing channels is a mixed picture, depending very much upon the nature of the organisation.  The most popular approach is giving equal weight to both in-person and digital customer service. This combination is being pursued by a third of our respondents, although they are not necessarily seeking full integration. 
• In a year that marked the full arrival of the FCA’s Consumer Duty, we are still seeing how ongoing regulatory changes are reshaping firms’ business models and strategies. The prospect of increased regulatory scrutiny has led 44 per cent of firms to identify regulatory risk as a top focus area for 2025. Timely access to accurate data and an agile monitoring strategy to enhance reporting and compliance have become crucial competitive advantages.
• 2024 has also been the year of consolidation with mergers and acquisitions involving Nationwide / Virgin Media, Cooperative Bank / Coventry, as well as the NatWest / Sainsburys and Barclays / Tesco deals.  It was notable that 44 per cent of executive respondents are actively looking for M&A opportunities, to scale up their business and customer base, whilst a further 52 per cent would be open to the right opportunity.  Innovation — particularly the acquisition of new technologies, products, or capabilities — is also a key driver for 44 per cent of respondents.
• Whilst the overall mood is upbeat, senior leaders are focused on key challenges and dependencies, to realise these opportunities.  Cost management remains a point of concern for 48 per cent, whilst a third of respondents were concerned about both skill and capability gaps and resistance to change.
• In response to the challenges, managing costs with resilient operating models (48 per cent), ensuring data quality and integrity (40 per cent), and keeping pace with compliance requirements (40 per cent) are seen as the priorities for in the current strategic cycle. 

Looking ahead, the coming 12 months will undoubtedly bring further transformative change and ongoing challenges – geopolitical turbulence, cost pressures and greater regulatory demands. Ultimately, the winners in this evolving landscape will be those that remain agile and think strategically about both the opportunities and challenges that lie ahead to meet the needs of all their stakeholders – customers, investors, colleagues, and regulators.

Download the report to explore detailed statistics and insights, along with sector-specific highlights provided by our industry experts.